Freeport Indonesia is a mining company operating in Papua, Indonesia. It faces problems with employees claiming that their salaries are too low to meet needs. The company has not fully fulfilled its corporate social responsibility obligations, as employee welfare is an important internal CSR issue. A demonstration from April 18-21, 2007 halted operations, demanding a salary increase. The document recommends Freeport improve CSR awareness for both external stakeholders and internal employees to resolve such issues proactively.

1. Freeport
CSR Problem with Internal Parties
Nadya Augustivani
Master of Management – Gadjah Mada University

2. PT Freeport Indonesia is a subsidiary company
established by Freeport McMoran Copper and Gold
Inc, who own the majority of its shares.
Indonesia has conducted exploration at two sites in
the Tembaga Pura region, Mimika Resident, Papua
Province, namely the Erstberg mine (from 1967) and
the Grasberg mine (since 1988).

3. Business Activities
Gold, Mine
Mining Companies
Mining Supplies

4. Problems
There is a claim from employees to the
company for increasing their salary.
The salary is not enough to fulfill employees
needs

5. Utilitarianism
 The utilitarianism principle
means that managers should
act in ways to create the
greatest benefits for the
largest number of people.
 Problems with this ethics base
are related to defining which
groups have to be
involved, defining the largest
number of people who
benefit from decisions, and
the ignoring of harm that may
be done through the means
used to achieve the ends.

6. Corporate Social Responsibilty
• Sustainable commitment from
business sector to doing
ethically and give contribution
for economic
development, thus increasing
life quality of employees and
their family, and local
community and people in
general.
(World Business Council for Sustainable Development)

8. UU PT No 40 Tahun 2007 Pasal 74
1. Perseroan yang menjalankan kegiatan usahanya di
bidang dan/atau berkaitan dengan sumber daya alam
wajib melaksanakan Tanggung Jawab Sosial dan
Lingkungan.
2. Tanggung Jawab Sosial dan Lingkungan sebagaimana
dimaksud pada ayat (1) merupakan kewajiban
Perseroan yang dianggarkan dan diperhitungkan
sebagai biaya Perseroan yang pelaksanaannya
dilakukan dengan memperhatikan kepatutan dan
kewajaran.

9. 3. Perseroan yang tidak melaksanakan
kewajiban sebagaimana dimaksud pada ayat
(1) dikenai sanksi sesuai dengan ketentuan
peraturan perundangundangan.
4. Ketentuan lebih lanjut mengenai Tanggung
Jawab Sosial dan Lingkungan diatur dengan
Peraturan Pemerintah.

10. Impact
A demo happens at April 18
until April 21 2007 asking
about salary increase.
Because of that, operational
process in Freeport halted.

11. Unethical Issue
Freeport did not do their
CSR as well. Employee, as an
internal factor, is also a
crucial element in CSR. CSR
is not an obligation for the
external parties only

12. SWOT Analysis
 Strength
Have good relationship
with government so they
have power as a company
in mining industry.
 Weakness
Having labor union so that
they could propose for
their right to the company.

13. Continue...
 Opportunity
The lack of law enforcement
in Indonesia.
 Threat
Demand for implementing
GCG.

14. Solution and Recommendation
to make the company more proactive and
interactive about CSR awareness for external
parties without sacrificing internal parties

15. THANK YOU
GRACIAS!